Paying someone who is not registered for VAT is perfectly allowed in the UK, provided their taxable turnover stays below the government’s threshold. Currently, the threshold is £90,000, and it is confirmed to remain at this level for the 2026/27 tax year. However, in the healthcare sector, you have to be careful. If the service they are providing doesn’t fall under the specific HMRC medical exemption rule, you might still have responsibilities to consider, especially if your own clinic is partially exempt. In this guide, we’ll break down everything you need to know about paying someone who is not VAT registered. You’ll get to know: What does “not registered for VAT” mean? Is it okay to hire a medical professional who is not VAT registered? What should you do before paying someone who is not registered for VAT? And much more… Let’s break it down! What Does ‘Not Registered for VAT’ Mean? When a business or self‑employed person is not registered for VAT, it usually means their taxable turnover is below the VAT registration threshold, or they haven’t voluntarily registered yet. For the 2025/26 and 2026/27 tax years, the UK VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period. Below this level, registration is normally optional for UK‑based businesses providing standard or zero‑rated supplies. Not registered for VAT does not always mean “small business”. In healthcare, it can also mean the person mainly supplies VAT-exempt services, so registration may not be required at all. Is It Okay to Hire a Medical Professional Who Is Not Registered for VAT? It is completely fine. In the UK, registration only becomes mandatory once a person’s taxable turnover goes over the limit. Many part-time locums, therapists, or new consultants stay well under that £90,000 mark. When you pay someone who is not registered for VAT, you simply pay the gross amount on the invoice. You won’t be able to “claim back” any VAT because none was charged in the first place. For a lot of private practices, this is actually preferred because it keeps the total cost of the service down. Why Are Some Healthcare Suppliers Not Registered for VAT? In the healthcare world, many people work as sole traders or run very small limited companies. If their annual income from taxable services hasn’t hit that £90,000 mark over a rolling 12-month period, they aren’t required to register with HMRC. However, there is a specific twist for the healthcare sector. A lot of healthcare services are actually “exempt” from VAT. Therefore, this income is excluded from your ‘taxable turnover’ and does not count toward the £90,000 mandatory registration limit. Because of this, you’ll find many highly skilled professionals in the UK who are not registered for VAT simply because their work falls under these exemption rules or they haven’t reached the turnover limit. Check Out: VAT Rules Healthcare Providers Need To Know What Should You Do Before Paying Someone Who Is Not Registered for VAT? Before you send over any money, there are a few things you should check to keep your clinic safe from an HMRC audit. Ask for a proper invoice: A bank transfer with no paper trail won’t cut it. Check the VAT status: Look at the invoice to see if any VAT has been added. If it has, ask for their VAT number. If they are not registered for VAT, ensure the invoice is not titled ‘VAT Invoice’ and does not include a VAT registration number or any VAT charges. Verify the number: If they do provide a VAT number, you can quickly verify it on the GOV.UK website. Look at the service: In healthcare, the tax treatment depends on what is being supplied, not just who is supplying it. Is it actual medical care, or is it something else? Think about your own recovery: If your practice makes both taxable and exempt income (partial exemption), remember that your own VAT recovery might be affected anyway. Why Medical Registration Matters More Than VAT Registration? Healthcare firms often get confused between being “VAT exempt” and not being registered for VAT. Even if a doctor or nurse earns £200,000 a year, they are not required to register for VAT if that income comes entirely from exempt medical care. Only ‘taxable’ income, such as from medico-legal reports or purely cosmetic work, counts toward the £90,000 registration threshold. HMRC looks at two things: Is the person a registered health professional (such as with the GMC, NMC, or HCPC)? Is the primary purpose of the work to protect, maintain, or restore the health of a patient? If the answer to both is yes, the service is exempt. If you are paying a consultant for something like “expert witness” work or purely cosmetic treatments, the rules change. How Does This Impact Your Invoicing? If you’re paying someone who is not registered for VAT, the invoices you receive will not show any VAT. This can make your accounting a little easier, but it also means you need to be extra careful with your record-keeping to avoid errors in your tax filings. If your business is VAT-registered, you cannot reclaim any tax on these invoices. However, you must still include the total in your accounting records (not as input VAT). This may sound simple, but separating them from your VATable purchases is an important step in keeping your accounting accurate. What Should an Invoice Look Like from Someone Not Registered for VAT? When you pay a freelancer or a contractor who is not registered for VAT, their invoice needs to be clear to satisfy an HMRC auditor. It shouldn’t just be a scrap of paper. It needs to include: Their name and business address. A clear description of the medical services provided. The date the work was done. Without a valid VAT number and a specific VAT charge on the invoice, there is no tax for you to reclaim, even if your clinic is VAT-registered. This is a common mistake we see where clinic managers try to “calculate” the VAT element on a gross …

Read more